Elon Musk will be making comments at tonight’s Cyber Rodeo event, starting at 7:00pm PT. We don’t expect any big announcements and see the event as a ribbon cutting party for Giga Texas. This comes two weeks after a similar event held in Berlin. While it’s unlikely that Musk will reveal updates to the business or the products, the impact from bringing these production lines online is material. The bottom line: Tesla can’t keep up with demand.
What to expect tonight
Musk is scheduled to start making comments at tonight’s Cyber Rodeo event at 7:00pm PT, which more likely means 7:30pm PT. The announcements are rumored to be about Cybertruck and Semi tweaks, which leaves room for investors to be surprised given that the announcement bar is low. Musk tweeted that the event’s “door [policy] won’t be super strict,” which could imply the size of tonight’s party will be impressive.
Tesla lead times are 2x longer than other car makers
In April, we surveyed lead times for Tesla deliveries (Model 3, Y, S and X) across eight countries for both standard and performance models. Delivery landed somewhere between 60-315 days, with an average of 135 days (or about 4.5 months). Finding a comparative lead time for traditional auto makers is more of an art given that times aren’t quoted online. To get a sense of how long it takes to get a car from a traditional car maker, we called a handful of dealers (4) in the US and were quoted lead times of 45-70 days, with an average of 60 (or about 2 months). In other words, you can get a car from a traditional car maker in the US in about half the time it takes to get a Tesla.
It’s outsized demand on top of a tight supply chain
While some view the long lead times for Tesla as an outcome of the supply chain, my view is that half of the lead times are related to Tesla’s outsized demand. Evidence of this is the March quarter, when Tesla grew deliveries by 72%, compared to the industry average down 18% (including Ford, GM, Honda, Toyota, Chrysler). This gap is similar to that of the December 2021 quarter, when Tesla grew deliveries by 71% and the industry was down 20%.
Giga Texas will eventually produce about 500k vehicles annually
Austin will produce about 500k vehicles/year. Factoring in Giga Berlin (about 500k per year) along with expanded production in California and Shanghai, I believe that Tesla will be able to produce about 2.3m vehicles by mid 2023, which is slightly more capacity than the 1.9m vehicles I expect the company to deliver in 2023.